Citi reiterates purchase on Goldman forward of investor day, with hopes for extra shade on financial institution’s development image
The primary investor day in three years from Goldman Sachs Group Inc. just isn’t extensively anticipated to convey any big surprises, mentioned Citi analyst Keith Horowitz.
However when executives on the marquee funding financial institution take the stage on Tuesday, Horowitz is hoping for extra particulars on how Goldman Sachs
GS,
will hit its return targets below its not too long ago reorganized three-tier company construction.
“We anticipate the first focus to be bridging the hole between present expectations and the medium-term returns goal,” Horowitz mentioned in a analysis observe on Friday.
Goldman Sachs is presently working below three main models: World Banking and Markets, Asset and Wealth Administration and Platform Options.
Beforehand, it reported 4 models: Funding Banking, World Markets, Asset Administration and Shopper and Wealth Administration.
Horowitz on Friday reiterated a purchase score on the inventory and a worth goal of $400 a share.
Additionally learn: Analyst retains impartial score for Goldman forward of massive investor day on Feb. 28
Whereas Goldman stays a “premier world franchise,” it’s working in a cyclical enterprise that pulls decrease valuation multiples from buyers, Horowitz mentioned.
Some key factors Goldman will doubtless emphasize embrace the expansion potential and sturdy earnings stream from its World Banking and Markets unit, in addition to natural development and a much less capital-intensive enterprise mannequin for its Asset and Wealth Administration unit, which incorporates its sizeable private-equity enterprise.
As for Goldman’s Platform Options unit, which incorporates elements of its consumer-banking enterprise, Horowitz expects to listen to a couple of potential path to producing income.
“We count on many questions on the Platform Options enterprise, together with the trail to profitability and whether or not one in every of these companies might be spun out or bought,” Horowitz mentioned.
Citi can also be anticipating questions on the sizing and timing of cost-savings alternatives following the consolidation of enterprise traces, in addition to alternatives to handle capital given looming Basel III capital necessities, he mentioned.
Whereas 2022 was a troublesome yr for Goldman, Horowitz mentioned the financial institution stays totally on observe.
Goldman Sachs Group’s inventory is up 6.2% in 2022, in contrast with a 3.5% enhance by the S&P 500
SPX,
and a 4.4% achieve by the Monetary Choose SPDR Fund
XLF,
Additionally learn: Goldman discloses losses in unit that homes Apple Card, GreenSky operations